Friday, November 18, 2011

What’s up with VAT? A helpful guide to understanding the Value-Added Tax.

International meetings can be quite complex to organize. Time differences, language barriers, and currency conversions are just a few of the obstacles meeting planners face when planning a perfect meeting abroad. The most confusing aspect of international meetings for many planners is the Value-Added Tax, or VAT, that exists in more than 140 countries outside the U.S. It can be compared to a sales tax, as it is the cost added to goods and services. However it is quite daunting to planners because there are no universal standards for administering the tax.

Every country has its own VAT rate, rules as to what it is applied to, and procedures regarding filing and deadlines. Although this can perplex many planners, experts say that there are basic steps meeting planners can take to find out what refund they are entitled to as well as ensure they follow correct protocol during the planning process.

The first step in mastering the VAT is to do preliminary research before planning a meeting. It is important to find out which countries offer rebates and which do not. Most European countries do, with Italy and Spain being the exceptions. The best way to obtain the most up to date information on VAT rates in specific countries is to check the country’s tourism website.

Remember that all VAT countries offer different rebates, so it is very important to research rates before creating a program budget. There are also some countries outside of Europe, namely China, India and Central and South America that charge VAT but do not offer rebate recovery. Japan, Australia and South Korea offer limited rebates, but their requirements and documentation is very tedious and complex.

The next step in the international planning process is to decide what type of meeting will be held. In many countries, rate eligibility depends on the type of event. For example, Ireland does not rebate VAT costs associated with an incentive program, however the U.K., France, Germany, Norway, Denmark and the Netherlands (and a few others) do. Before choosing a country for a meeting, it is important to check its tourism website for information on rate eligibility.

So, you’ve done your research and chosen a destination for your meeting. What’s next? Collecting paperwork and filling out forms. I know, it doesn’t sound very fun, but the benefits are worth it. Experts stress the importance of keeping the necessary receipts and invoices and completing the filing forms. This form is usually supplied by the hotel, and all invoices should be filed under the same name. Make sure you know when the deadline is for submitting the forms – every country has a different deadline.

If the Value-Added Tax is too complex or too tedious to planners, there are many resources available to ease the VAT rebate process. Third-party VAT reclamation agencies are extremely helpful and can take care of all the refund process, but it is important to contact them before the planning process rather than after the event. Their service costs are based on a percentage of the rebate.

When planning a meeting or event abroad, remember that the VAT rebate, although daunting, can be a money saving process. So go out there and master that VAT!

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